Question
A company currently produces three products from a joint process. The joint process has total costs of $288,000 per month. All three products, A, B
A company currently produces three products from a joint process. The joint process has total costs of $288,000 per month. All three products, A, B and C, are immediately saleable as they come out of the joint process. Alternatively, any of the products could continue on with additional processing and be sold as a more complete product. The following information is available:
| Product | Units | Immediate Sales Price | Later Sales Price | Unit Cost of Further Processing |
|---|---|---|---|---|
| A | 46,000 | $ 7 | $ 11 | $ 6.00 |
| B | 92,000 | 8 | 12 | 3.00 |
| C | 138,000 | 10 | 16 | 7.00 |
Required:
a-1. Should Product A be sold immediately or sold after processing further?
a-2. How much will the decision affect profit?
b-1. Should Product B be sold immediately or sold after processing further?
b-2. How much will the decision affect profit?
c-1. Should Product C be sold immediately or sold after processing further?
c-2. How much will the decision affect profit?
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The Audit Process Principles Practice And Cases
Authors: Stuart Manson, Iain Gray, Iain G. Sheffield, I.H. Gray, I. Etal Gray
2nd Edition
1861520107, 9781861520104
